PRECIOUS-Gold heads to first weekly gain in 4 weeks after Fed rate hike

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* Gold up 0.5 percent this week
* Dollar, U.S. yields lower after rate hike
* Low prices spur Asian demand
(Updates comment, prices; adds byline, NEW YORK dateline)
By Chris Prentice and Peter Hobson
NEW YORK/LONDON, Dec 15 (Reuters) - Gold prices clung to
earlier gains and were poised for their first weekly gain in
four weeks on Friday, withstanding pressure from strong equities
markets on continued support from this week's interest rate rise
by the Federal Reserve.
Spot gold was up 0.19 percent at $1,255.12 per ounce
by 2:22 p.m. EST (1922 GMT), up 0.6 percent for the week as it
recovered from Monday's five-month low of $1,235.92. The most
active U.S. gold futures for February delivery settled
up 0.03 percent, at $1,257.50 per ounce.
Higher interest rates usually push gold lower because they
raise bond yields, reducing the appeal of non-yielding bullion,
and boost the dollar, making gold more expensive for holders of
other currencies.
But markets had priced in Wednesday's rise and the dollar
and bond yields fell after the Fed kept its outlook for three
rate rises next year unchanged and said proposed U.S. tax cuts
would not significantly spur growth.
U.S. inflation remained weak, which Chicago Fed President
Charles Evans said on Friday undermined the case for rate rises.
The dollar recouped some losses as Republican senators
worked to resolve disagreements on the tax reform. Major stock
indexes hit record highs.
"The rate hike was baked in, but I think more importantly
there was this slight doubt in people's minds that the Fed might
be more aggressive in 2018. What we got from them this week
tells us that probably isn't the case," Bill O’Neill, partner at
Logic Advisors in Upper Saddle River, New Jersey.
Also helping was a rise in demand in Asia as buyers took
advantage of low prices.
Societe Generale analyst Robin Bhar said gold's bounce would
be short-lived because other asset classes including equities,
industrial metals and even bitcoin appeared to offer better
returns.
Gold is up around 9 percent this year while global shares
and industrial metals have gained some 20 percent and bitcoin
1,740 percent.
In other metals, palladium was down 1.19 percent at
$1,020.72, but still up for the week after hitting $1,038 an
ounce on Thursday, the highest since early 2001.
"The palladium metal supply remains tight and until this is
alleviated we can expect the premium to remain," said Miguel
Perez-Santalla, vice president of Heraeus Precious Metals in New
York.
Silver was up 1.01 percent at $16.03 per ounce and
set for its first weekly gain in four weeks.
Platinum rose 1.28 percent at $889.75 per ounce,
marginally higher for the week.
(Additional reporting by Apeksha Nair in Bengaluru; Editing by
Edmund Blair and James Dalgleish)